What is the difference between chapter 7 and chapter 13 bankruptcy?

One of the more difficult things to figure out in bankruptcy is whether to file a chapter seven bankruptcy or a chapter 13 bankruptcy. I’m Joe Jeppson bankruptcy lawyer here in Kansas city, serving clients in Missouri and Kansas certified specialist in consumer bankruptcy law. Now, the way I think about is kind of silly, but stick with me, it makes it a lot easier to talk about in my head. We sort of split everything into two buckets. Bucket. One is stuff you want to keep or things you have to pay for bucket two is everything else. That means the house you want to keep the car. You want to keep the taxes and child support that we have to pay for that stuff’s over in bucket. One, bucket two is credit cards and medical bills and things we’d rather get rid of. So a chapter seven bankruptcy is what most people think of where we file some paperwork with the court.

Show them you can’t afford to pay bucket to the court degrees dumps out bucket two and lets you deal with bucket one on your own. If you want to keep your car in your house, that’s fine. Just keep making the payments. Now chapter 13 is what we use. If you need help with bucket one, if they’re about to come pick up your car, if you’re behind on your house, we set up a payment plan through the court between three and five years, where you go back to making the regular monthly payments on your house, plus a little extra to get you current enough, to pay the car and taxes and child support things that you have to pay. Plus whatever you can afford of bucket two. Now, if you can’t afford anything towards bucket two, they just sit there on their hands and get nothing.

And at the end of the payment plan, whatever’s left in bucket two gets dumped out and goes away just like you would have in a chapter seven. So in the end you still don’t pay for the credit cards and medical bills and things, but you have more time to help get caught up on the stuff you do want to keep or the things that you have to pay for like taxes and back child support. So if your only issue is that you want to get rid of credit cards to stop lawsuits and stop all the stress. Chapter seven is probably the way to go. If you’re behind on the house or the car and you need help getting caught up chapters, your teens, probably the way to go. And there’s a wide gray area in the middle where a chapter 13 might be more useful or chapter seven might get the job done, but that’s probably, you want to talk to your attorney to help figure out what’s best for you. For more information, give us a call for your free consultation. We are happy to help figure this out for you.